View Full Version : The nights are drawing in.....

13th Jun 2001, 16:14
...as the US Economy slows down..!!

This may trigger another recession this side of the pond. http://www.pprune.org/ubb/NonCGI/eek.gif

Just thinking: How will this affect the budget carriers (sleasy, go etc.)?

Will any survive this? (should it happen)
I mean, they were started as we came out of the early 90's recession, and have prospered during the boom.

BUT can they face the ultimate test...???? http://www.pprune.org/ubb/NonCGI/confused.gif

How did Ryanair cope last time?

Anyone got any opinions, facts, flaming?? :)

ALSO, how do we think PPRuNe will affect all this?

Live long and Prosper.....

[This message has been edited by swashplate (edited 13 June 2001).]

13th Jun 2001, 18:21
During the last U.S. recession Southwest was the only carrier to post a profit whilst the big boys were loosing millions. Here in Europe I reckon Ryan could survive together with perhaps one of the other three. My bet would be on Easy (only because of the financial clout behind that company) with Go and Buzz dropping out.

When there's a recession people might be watching the pennies but travel doesn't stop. A good portion of the business community may opt for Y class on the majors or even switch to the cheaper "no frills" (and more importantly, "no restrictions") carriers.

13th Jun 2001, 22:46
In a recession, the majors can kiss their asses godbye...the cheap seats will always sell.

Anti Freeze
13th Jun 2001, 23:08
Growth down, Inflation up, Interest Rates will start to rise, Tarde Gap is growing, Oil prices, will they rise again ?

I think the low cost Airlines may do better than some of the Majors, lower Bottom Lines.

14th Jun 2001, 11:53
This recession thing has been overstated

in the UK we have

Falling unemployment lowest for 25 years
Low and stable inflation lt 2.5%
Lowest interest rates for many (20?) years
BA back into profit big time, Easyjet doing well..

In the US the NASDAQ and Dow have
bounced back to levels higher than they were
3 months ago

Although there is a slowdown in the US Southwest are bullish and predicting an expanding market in the US for budget carriers

Most of this recession thing relates to over
values telecom and tech stocks - a market correction nothing more..

Good time to buy tech stocks..?

Wee Weasley Welshman
14th Jun 2001, 13:31
Well one low cost carrier at least is *not* committed to the arrival of a fleet of shiny new Boeing aircraft that - whilst cheap - might be expensive overkill come any recession...

I - in my very limited knowledge of the business - would have thought the low cost sector would be best positioned to weather a recession. Certainly in the US that is the case with SouthWest...


14th Jun 2001, 14:38

I am sure that all of the people losing their jobs in the telecomms sector will be very relieved to hear that this recession is overstated. Those of us who are involved directly or, as in my own case, indirectly in this industry, are seeing worldwide factory closures and redundancies on a frightening scale e.g Motorola at Bathgate. This does not show up in the overall employment figures yet, but when I hear most equipment manufacturers have order books which are 50% below 2000 levels, the knock on effects are certainly going to show. These knock on effects will certainly include a reduction in expenditure on air travel because telecomms is such a global industry. For the same reason, the freight sector will also be affected.

However, one has to remain optimistic as there is no other option and it is always possible that high tech industries such as telecomms can bounce back very quickly. This will lead to the usual problems and opportunities for some, caused by production under capacity as a result of the closures and current low investment.

Sorry, as a PPL I don’t normally intrude on R & N but I thought that this discussion on recession might benefit from a few views from the front line, as it were.

"If you keep doing what you've always done, you will keep getting what you've always got"

The Guvnor
14th Jun 2001, 14:45
Low cost operators will generally do very well in any downturn as passengers move away from more expensive carriers. In an upturn, those passengers will generally move back to the higher cost carriers; but they will be replaced by 'new travellers' - people who previously didn't have the economic ability to travel.

Of course, in a downturn, costs have to be tightly controlled. Demands for pay increases most certainly do not bode well for the viability of any company!

14th Jun 2001, 15:54
However Easy did post a loss for the first quarter after the floatation.........Funny That!

Massaged figures prior to floatation?

How can a company that has expanded so quickly and borrowed so much money possibly do well in a recession?

Ryan Air kept costs low in the early days and expanded cautiously setting a firm foundation for its growth and purchase of brand new aircraft.

If there was a recession and interest rates go up, the Majors have the pools to weather the storm, does easyjet? I don't think so.

[This message has been edited by autobrakemedium (edited 14 June 2001).]

Kaptin M
14th Jun 2001, 16:21
Tell me Guv, what percentage of an aircraft's seat loadings represents the pilots' salary? If pilots DEMAND a 200% salary INCREASE, how many extra seats must the airline sell, to cover that increase?

Where DOES all the PROFIT go, Guv?? Towards "Management consultant's" advice???

14th Jun 2001, 16:38

I appreciate from personal experience that
losing ones job in telecoms or e-technology
translates to a personal disaster

I was in macro-economic mode - merely making the point that a lot of these stocks were
over valued and there is no problem in other
areas such as air transport

Also the 'US recession' was hyped up by dubbya to get his x trillion dollar tax cut through - we can expect to see this stop now that he has got it through..

14th Jun 2001, 17:10
RVR 800--
If the ...."recession was hyped-up by dubbya to get his x-trillon dollar tax cut thru..." and ...."there is no problem in air transport", then why prey tell has a company like Atlas, for example, have twelve aircraft parked and 107 on furlough? Or, why would a company like Polar be reducing their services to Asia?

14th Jun 2001, 17:27
The first post from Swashplate on this thread only asks about the low cost carriers, why does he think that just because the low-cost carriers use a different business model from the others, that they necessarily are more prone to recession? or is he just one of those people who doesnt like low cost carriers? A recession is bad news for everyone, not just low-cost carriers.

14th Jun 2001, 20:18

I was thinking about the low cost carriers because they don't seem to have a large group behind them to back them up in times of crisis (of course, I may be wrong).

If you remember, the bearded one sold his record label to save Virgin Atlantic in '91 (putting it crudley...!! :) :))

I wasn't having a go at them - I've flown easy a few times and they were OK. I just wondered how such apparently small companies will cope 'in the hard times'.
IMHO large companies can cope with storms better than small 'uns, but if thats wrong then please illustrate...

Love and Peace maaaaaannnnnn..... :) :)

Live long and Prosper.....